01943cam a22002537 4500001000600000003000500006005001700011008004100028100002000069245018400089260006600273490004100339500001500380520089300395530006101288538007201349538003601421700001701457700002401474710004201498830007601540856003701616856003601653w7259NBER20170818005128.0170818s1999 mau||||fs|||| 000 0 eng d1 aFullerton, Don.12aA Tax on Output of the Polluting Industry is Not a Tax on Pollutionh[electronic resource]:bThe Importance of Hitting the Target /cDon Fullerton, Inkee Hong, Gilbert E. Metcalf. aCambridge, Mass.bNational Bureau of Economic Researchc1999.1 aNBER working paper seriesvno. w7259 aJuly 1999.3 aWe explore the effects of environmental taxes that imprecisely target pollution. A review of actual policies indicates few (if any) examples of a true tax on pollution. More typically, environmental taxes target an input or output that is correlated with pollution. We construct a simple analytical general equilibrium model to calculate the optimum tax rate on the input of the polluting industry, in terms of key behavioral parameters, and we compare this imprecisely-targeted tax to an ideal tax on pollution. Finally, we consider incremental tax reforms such as a change in either tax from some pre-existing level. Using a utility-based money-metric measure of welfare, we examine the losses that arise from not taxing pollution directly. With no existing tax, under our plausible parameters, the welfare gain from an output tax is less that half the gain from an emissions tax. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.1 aHong, Inkee.1 aMetcalf, Gilbert E.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w7259.4 uhttp://www.nber.org/papers/w725941uhttp://dx.doi.org/10.3386/w7259